ECON 410 - Public Economics

[Spring 2018 Syllabus]

What’s so great about democracy other than it’s democratic? - Gordon Tullock

Modern democratic governments directly control more than $\frac{1}{3}$ of gross national product and strongly influence the remaining $\frac{2}{3}$ through various fiscal and regulatory policies. How does “the government” make decisions, enforce laws, and provide the goods and services it is expected to? How does it interact with, and affect, the rest of the economy? A major part of this course is exploding the black box that we call “goverment” to examine and model the different political actors: voters, politicians, bureaucrats, & interest groups, and how they interact with one another to produce public policy and achieve their separate goals.

The major analytic framework used in this course is commonly known as “public choice:” the application of economic modeling (optimization and equilibrium) to study non-market decision-making. Markets use prices and voluntary exchanges to allocate scarce goods among competing uses based on individual preferences. Many other aspects of modern life do not rely on prices or voluntary exchanges; the primary arena we explore is politics - the realm of collective decision-making where a single choice is made for everyone. A simple summary of what we will be doing in this course is expanding and exploring answers to the question: how do we choose in groups?

Our primary focus will be the government of a modern liberal democracy, particularly the United States since 1789. In many ways, this is a more rigorous complement to your classic high school or college Civics course, but you will soon discover, it will at times emphasize key civic virtues of American governance, and at other times gore sacred cows and contradict popular myths. Time permitting, the end of the course will examine and compare other political systems such as autocracy, as well as other forms of non-market decision-making like law and religion.

Topic Slides Readings
1 Introduction Slides How to Read an Article
2 Externalities and Bargaining Coase (1960)
3 Property Rights Demsetz (1967)
4 Public Goods and Collective Action I Slides Olson (1982: Ch. 2)
5 Public Goods and Collective Action II Slides Ostrom and Ostrom (1999)
6 Efficiency and Justice Slides Justice Harvard Videos 5, 14
7 Constitutional Political Economy I Slides Madison (1778); Plunkitt (Chs. 1-3); Machiavelli (Chs. XV-IX)
8 Constitutional Political Economy II Slides Buchanan and Tullock (1962: Chs. 3, 5, 6)
9 Voting I: Social Choice Theory Slides Holcombe (2016: Chs. 2, 3, 5)
10 Voting II: Ignorance and Irrationality Slides Somin (2004); Caplan (2007)
11 Interest Groups I Slides Tullock (1967); Mitchell (2012)
12 Interest Groups II Slides Stigler (1971); Yandle (1983)
13 Bureaucracy Slides Niskanen (2001); Mises (1949, Ch. XV.10)
14 Politicians and Legislators I Slides Acemoglu (2003, sections 1, 6); Holcombe (2016, Chs. 8, 10, 11)
15 Politicians and Legislators II Martin and Thomas (2013); Safner (2013)
16 Politicians III: Reform Rauch (2015)
17 Federalism I Slides Weingast (1995)
18 Federalism II: Exit, Voice, and Loyalty Slides Hirschman (1971, Chs. 1, 2, 3)
19 The Sharing Economy Munger, Tomorrow 3.0 Video
20 Basic Income Guarantee (BIG) Econtalk: Munger on BIG
21 Will Blockchain Disrupt Governance? Slides Medium: How does the Blockchain Work?
22 Network Neutrality Slides Faulhaber (2013)
23 Autocracy I Slides Olson (1994); Econtalk: Bueno de Mesquita on the Political Economy of Power
24 Autocracy II: Coups and Revolutions Slides Tullock (1971); Kuran (1989)
25 Law I: Law Without the State Slides Benson (1989); Priest (1977)
26 Law II: Superstition Slides Leeson (2011; 2012)
27 Law III: Crime Slides Friedman (1995)
28 Religion Slides Iannaccone (1992); Leeson and Russ (forthcoming)